203b Loan

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What is the FHA 203(b) Loan Program?

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What is the FHA 203(b) Loan Program?

The 203b loan is the most common type of home loan insured by the FHA. FHA 203b loans are designed to finance properties between 1-4 units. While these loans are insured by the Federal Housing Administration, they are issued by non-government entities, such as banks, credit unions, savings and loan associations, or private lenders.

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What is the FHA (Federal Housing Administration)?

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What is the FHA (Federal Housing Administration)?

The Federal Housing Administration, or FHA, was founded in 1934 in order to help more Americans get access to the housing they need. To do this, the FHA sets construction standards and insures loans from private lenders in order to make it easier for homebuyers to get financing.

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Loan Assumption in Relation to FHA 203b Loans

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Loan Assumption in Relation to FHA 203b Loans

Loan assumption occurs when the buyer of a property takes on, or ‘assumes’ the existing mortgage on the property. While most conventional home loans are not assumable, FHA 203(b) loans are— and that’s a big benefit for borrowers.

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DTI (Debt-to-Income Ratio) in Relation to FHA 203(b) Loans

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DTI (Debt-to-Income Ratio) in Relation to FHA 203(b) Loans

If you’re considering taking out a 203b loan to buy a home, your DTI, or debt-to-income ratio, is one of the most important metrics that FHA lenders will look at to determine your eligibility. DTI is calculated by taking a borrower’s monthly debts and dividing them by his or her monthly income.

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